2 elements your business needs rock solid
Years ago, my partner and I had a house built. We picked the lot, the floor plan, the fixtures, colors, and more. Then we watched and waited for it to be built. I am not a patient person and seeing no progress when I drove by was very frustrating, so much so that my partner forbade me from visiting the site unless he told me there was something to see.
There was always progress being made, even if it was not visible upon drive-by. The permitting process, then the lot clearing and underground utility installation, then digging of the footprint, followed by the footings and then the foundation. It would be weeks between my visits, and they included admiring the stakes and flags for where the footprint would be or reviewing the permit board to see what had been signed off that week. For what seemed like an eternity, there was no house.
Then there was a foundation. The most critical aspect of the house was finally there. It looked like a wooden platform on concrete, and it was beautiful. It was the start of something that would grow fast from that point forward. My frustrations from the weeks/months leading up to the foundation were forgotten. It was there and now the house could fully be built in a way that would keep it solid and standing for years to come.
I am reminded of the house frequently when I get frustrated with the pace of progress or growth in my business. I am still largely at the foundational stage where my efforts may not be fully visible should someone drive by, but will pay off as I grow in the coming months/years.
As you think about your business and your plans to grow, scale, sell, and/or enjoy the fruits of your efforts, ask yourself if you have a solid foundation in place? Will all the pieces supporting that growth and success be held up, or will you have to focus on making the business less wobbly?
If you are in the early stages of your business, getting a strong foundation will not take much effort and only require periodic review and updates as your business shifts and changes. If you ignored the foundation as you got started, which many owners do, and focused on momentum, now is the time to shore up your foundation.
While there are many foundational elements to every business, there are two universal pieces that having in place will strengthen your business:
#1 Contracts
Most business owners do not enjoy dealing with the legal pieces of running the business. Many avoid attorneys at all costs. I will contend that attorneys are always cheaper when you go to them proactively, than when you approach them in a bind.
Having solid contracts and agreements in place with your vendors, service providers, customers and clients, and employees will ensure every relationship has a strong foundation and both parties are in alignment on what is to be done. While negotiating is not fun for many people, going through the process of agreeing on what success for both parties will require allows you to align, or walk away if things are not aligned. Having contracts in place will also ensure when you go to sell your business, or bring in investors or partners, they will know what terms and conditions exist for the business to continue to grow.
#2 Financials
You may question how there could be a business without financials, and you are not wrong. All businesses have a bank account, money going in and out, and taxes filed. Financials as a foundational element means more than monitoring the checking account to see that you have money.
Having accurate numbers on an ongoing basis gives you quality information when you need to make decisions. Seeing what brought in money and where money was spent each month gives you a chance see trends, shift focus, and making changes more quickly and with greater confidence. It also puts you in a stronger position when raising capital or selling your business.
My bookkeeper is critical to my success in this category. She makes sure all transactions are categorized and the accounts are reconciled each month. Then I can look at how things are going, what was unique about the month and assess if I am on track to meet my goals. It is not a huge time commitment, but the monthly habit ensures I am not caught off guard when something changes or when I need to provide my financials to an external source like the bank or my accountant.
Having a solid foundation is not sexy or glamorous. It is not a one-and-done task (unlike building the foundation of the house and hoping it works for the next 100 years). Your foundation will always need some care and feeding. And it will likely need more than contracts and financials to be in a strong healthy space. But as you think about what your foundation needs, start with these two components and you will be well on your way to building the business of your dreams.